Risk & Compliance

DaimlerChrysler Hotline in Hot Water

A former administrator of the automaker's whistle-blower hotline claims that corporate auditors suppressed some claims of theft and fraud and did n...
Craig SchneiderJuly 27, 2005

The Securities and Exchange Commission is investigating allegations made by the former administrator of DaimlerChrysler AG’s confidential employee hotline, according to The Wall Street Journal. Christine Holtzman reportedly claimed in her suit in U.S. District Court that she was wrongfully fired in 2003 after complaining about how the hotline was run.

Under a provision of the Sarbanes-Oxley Act of 2002, all public companies must provide a means for workers to anonymously report alleged fraud or misconduct to the audit committee and be shielded from retaliation.

Holtzman alleged that corporate auditors suppressed some claims of theft and fraud that made on the hotline, the paper reported, and did not investigate others. Holtzman reportedly said that in 2003, she began to suspect that one of her supervisors didn’t adequately follow up or report to the audit committee a handful of hotline cases that related to alleged accounting mistakes or possible fraud.

“Many cases were more than a year old, and the allegations were not being investigated,” she said in a statement filed in court, according to the Journal. She also alleged that some cases with Sarbanes-Oxley implications weren’t being entered into reports or were being backdated to remove them from reports sent to the audit committee.

In addition, Holtzman alleged that in several cases, DaimlerChrysler security agents tried to identify individual hotline callers; the company fired at least one whistle-blower, she also claimed.

Other DaimlerChrysler employees have reportedly put up similar fights with mixed results. “People inside the company started to see the hotline as a good way to get caught” and become branded as a troublemaker, said former Chrysler accountant David Bazzetta, who filed his own wrongful-dismissal suit when he was fired last year, the paper noted. A judge reportedly has denied Bazzetta’s claim under Sarbanes-Oxley, but his allegation of bribery by a division of DaimlerChrysler, which the company disclosed last year, is still reportedly being investigated by the Securities and Exchange Commission.

Holtzman was handed a letter of termination in December 2003 that cited “insubordinate behavior.” A year earlier, however, her performance evaluation noted her “teamwork, communication, planning, and customer responsiveness,” reported the Journal.

DaimlerChrysler is cooperating with the SEC investigation, according to the newspaper. A spokesman reportedly told the newspaper that most of the cases cited by Holtzman as being suppressed were minor problems or had been resolved.